A Guide to the E-invoicing Universe in Mexico

What do all the Spanish words and phrases associated with Mexican e-invoicing mean, and what do companies doing business there need to know as they navigate around them? Here is a map to the Mexican e-invoicing universe.

Want to know more? Learn how Sovos has more than a decade of experience helping companies navigate Mexican e-invoicing mandates.

 

Infographic: State 1099 Reporting Deadlines

By far, the biggest challenge facing organizations during 1099 reporting season this year was state reporting. With states tightening deadlines and multiple jurisdictions and reporting thresholds to deal with, Sovos customers found state reporting more complex than any other element of reporting season.

This updated infographic shows why. The map shows 1099 reporting deadlines by earliest deadline per state. In just a few years, the vast majority of 1099 first deadlines have shifted from March to January. Combine that shift with changing thresholds for 1099-K forms and other state-specific policies, and it is clear why state reporting has become such a challenge and will likely continue to be.

 

With reporting periods shrinking, organizations need to centralize and automate reporting processes in order to maximize efficiency, ensure compliance and avoid financial penalties.
Find out how Sovos can help.

Global Taxation is

Going Digital

Here's How to Prepare

An underappreciated revolution--the shift to digital taxation--is underway. More and more countries are requiring businesses to comply with a new model of tax reporting and compliance.

This is the digital transformation of tax: a climate in which global tax authorities demand more e-invoicing and e-reporting—which will likely lead to more e-assessments and e-audits. Here, we explore the transformation and offer a clear path forward for business and technology leaders to tackle its challenges and leverage opportunities.

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To date, about 30 countries have implemented some form of digital tax reporting or collection requirement—and many of those early movers are developing nations such as Brazil and Mexico. As Intra-European Organisation of Tax Administrations Executive Secretary Miguel Silva Pinto explains, a primary motivator moving developing countries toward digital processes is that “digitization is a highly effective means of countering fraud.”

But going forward, more nations—including developed economies—will up the ante on digital reporting requirements. Not only will the information collected swell to include more intimate details around corporate operations, it will also shift from taxpayer-submitted to government-issued returns.

“The rise of digital taxation turns the traditional tax collector-taxpayer relationship on its head,” says Carolyn Bailey, partner at Ernst & Young’s Tax Services. In a Forbes Insights survey of 250+ senior executives, majorities of cross-industry finance, tax and IT leaders report experiencing a variety of trends in digital taxation.

Companies Face New Requirements

80%
of leaders experience
localization
which requires that tax software and reporting processes meet local regulations
64%
of leaders experience
e-Reporting
which replaces manual periodic form filing of summary information to online transmission of files with transaction data
64%
of leaders experience
e-Accounting
which requires businesses to transmit entire accounting ledgers to the tax administration or maintain accounts hosted by the tax administration based on their own transaction data
56%
of leaders experience
e-Invoicing
which mandates the use of e-invoices and real-time submission to the tax administration
Previous
Next
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The switch to digital taxation introduces a variety of challenges, risks and costs: some are immediate and tactical, while others are longer-term and strategic.

The Challenge of Digital Taxation

Transparency

Tax authorities will have a clearer window into a company’s tax operations

Smarter Tools

Advanced analytics and AI will monitor consistency, track compliance and more precisely choose audit targets

Scrutiny

This unprecedented visibility means more intrusive controls, higher income assessments and the potential for tax controversy

Short-term Challenges

Initially, companies will need to tweak or even overhaul their invoicing, payment, enterprise resource planning (ERP) or other financial systems. Challenges will multiply as individual jurisdictions implement and continuously update digital requirements and more nations join the fray.

Meeting multiple requirements on short timelines across a growing list of jurisdictions can lead to a patchwork of solutions amid a diversion of scarce local IT and tax resources. But failure to achieve compliance in real-time reporting of transactions impacting VAT and broader taxation leads to fines, business disruption and damaged reputations.

Long-term Challenges

Digitization of taxation is part of an even larger trend—the shift to sharing more intimate information with tax authorities, a process accelerated by the OECD’s Base Erosion and Profit Shifting initiative (BEPS).

Digitization of so much data “becomes tax disclosure on steroids,” says Bailey. Soon enough, there will be jurisdictions applying advanced analytics and AI to scrutinize enterprises in search of evidence that can be used to levy higher assessments.

“More nations will be collecting massive amounts of information about not only individual companies, but entire industries, giving authorities an unprecedented window into operations and profitability.

Carolyn Bailey

Partner, EY Tax Services
Digital Tax Administration Services

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The path forward can be daunting for business leaders: 57% say that responding to digital taxation represents a significant challenge for their company. Forbes Insights research findings and Bailey’s guidance can help business leaders create an explicit strategy.

Your Transformation Agenda

Take Inventory

“Take inventory of where you’re operating and where these requirements are being introduced,” recommends Bailey. It’s essential “to gain an understanding of the deadlines and to find out about penalties and enforcement.” Inventories should also take into account future investments.

Centralize & Standardize

83% of surveyed executives say they will be taking steps to move global taxation into a more centralized model. Greater centralization will eliminate the need for local IT patches and workarounds, in turn creating “opportunity for companies to achieve greater standardization,” says Bailey.

Streamline

The shift to digital processes—and away from manual, paper-based and often error-prone single-country systems—presents an opportunity to reduce costs while improving quality and efficiency.

Outsource

Executives are seeking assistance from specialists with expertise in digital VAT/GST operations around the world, as well as working more closely with ERP and other financial software providers. Most will be hiring additional IT and tax staff at headquarters and locally.

Collaborate

Perhaps the greatest necessity is to unite leaders across functions and processes. This begins with IT and tax, but also includes the broader finance, operations and strategic planning teams.

Turn Risks Into Opportunity

Synchronize Solutions

A comprehensive response is essential. Many companies need country-specific e-invoicing and related tax solutions, which requires a more systematic approach. And as tax authorities leverage their increased insight, companies must also prepare for more intrusive tax administration controls, tax controversy and intense scrutiny on transfer pricing. A coordinated response linking core business processes and ERP systems with new interfaces and improved solutions for reporting and compliance can significantly reduce costs and risks.

Dig Into Data

Greater standardization of information exchanged with tax administration platforms leads to vast new caches of mineable data. Tools like AI could help sift through detailed cost, revenue and related operational data, leading to more optimal decisions and strategies. Companies can also leverage the same data and tools to proactively scour their business models for tax efficiency and compliance—allowing for improved tax planning, contemporaneous documentation and justification of transfer pricing policies. 

Overall, the trend is clear and unavoidable: taxation is going digital. The best way forward is to use this as an opportunity to improve business outcomes.

Brazil: Electronic Invoicing and Reporting Requirements

In 2008, Brazil adopted a clearance electronic invoicing model in which the country’s tax authority must receive and clear an invoice before a supplier can issue it to a payer. More than a decade later, the Brazilian tax administration’s digitization has evolved so much that other tax administrations call Brazil the Google of fiscal goods. 

Current regulations include electronic invoices for: supplies of goods (NF-e), services (NFS-e), transport services (CT-e), freight (MDF-e), SPED, REINF and, more recently, for the supply of electricity (NF3e). 

This document provides an overview of the mandates and regulations in Brazil.

Mexico: Electronic Invoicing and Reporting Requirements

Mexico is a pioneer in electronic invoicing and VAT enforcement, having begun its digitization journey in 2010. Today, Mexico has one of the most technologically advanced tax administrations in the world. Companies unaware of or unprepared for Mexican e-invoicing mandates could face significant fines and penalties, along with supply-chain disruptions and cash-flow issues. This document provides an overview of mandates and regulations in Mexico.

Growing Pains: Tax Information Reporting Obstacles

Companies operating in the technology space often see rapid growth. However, leaders may be blindsided by multiple Tax Information Reporting obstacles that can cripple their progress.

See the infographic below to learn more.

Cyber Monday 2019 – Sales Tax Preparation Key to Success

Cyber Monday 2019 is anticipated to be one of the most challenging to date for ecommerce and finance teams. More spending, in fewer days, and many more states imposing economic nexus, may subject more online retailers to sales or use tax collection and remittance responsibilities.

Why Untangling Tax Laws in Brazil is Beyond Difficult

If you have the responsibility for VAT determination and tax reporting in Brazil as are part of your job description, you no doubt understand the levels of complexity involved in getting it right and ensuring VAT compliance.

Brazil has long been considered amongst the most difficult regions to achieve tax compliance. The country represents the most diverse landscape for VAT determination of any industrialized nation. The complexity of its fiscal rules and validations are increasing by the day, evidenced by the fact that since the Federal Constitution was enacted in 1988, nearly five million tax related laws and decrees have been issued. This is an issue that is costing businesses a disproportionate amount of time, money and resources.

Value-added tax is constantly evolving, and Brazil’s complex and rapidly evolving tax codes and regulations are making it increasingly difficult for businesses to remain compliant. Many companies are turning towards VAT tax software and automation technology to reduce the burden of managing these processes.

For a clearer explanation as to why Brazil has become so complicated and the sheer volume of VAT regulations and standards businesses are up against, we have put together this infographic, Untangling Tax Laws in Brazil is Beyond Difficult. This will help inform you as to where the Brazil market is headed and why it is so important to develop a tax strategy that is capable of keeping pace with consistent change, new VAT reporting standards and mandates and increasing demands on business to allow for stricter government oversight.

Sovos has considerable experience in providing VAT tax solutions for companies operating in Brazil. Our team of local, regulatory experts is second to none and our cloud-based tax solutions work seamlessly with existing technology platforms such as SAP.

If keeping current with changing laws in Brazil is creating an undue burden on your organization and remaining compliant with VAT tax mandates has become more a matter of hope rather than a probability, we invite you to talk to our team of experts.

We will work with you to identify your areas of greatest exposure and design a VAT tax solution that meets the needs of your operations in Brazil and also has the capability to scale to meet the needs of your organization globally.

The continued digitization of tax has made it imperative that companies keep pace with changing regulations in real-time. Falling behind is not a viable option. If your organization could benefit from another look at your tax management processes in Brazil, take the time to talk to Sovos.

Why Partner with a Certified Service Provider (CSP) for Sales Tax Administration

Certified Service Providers (CSPs) allow businesses to outsource most sales tax administration responsibilities, making it easier to comply with the laws of a given jurisdiction.

Choosing a CSP to manage your sales tax filings reduces the burden of managing end-to-end sales tax compliance while reducing organizational liability during the tax calculation process.

In Focus: Greece’s Upcoming VAT Reform

Greece is introducing a tax reform to increase efficiency, prevent fraud and close its VAT gap by digitising its tax system. Although 1 October 2020 had been the intended date for mandatory participation, late changes announced by the tax authority mean only some taxpayers are obliged to use it for the rest of 2020. For others, participation during the first three months is voluntary. From 1 January 2021, it will be mandatory for all.

Infographic: Top 10 VAT Compliance and Reporting Lessons from Latin America

Greece is introducing a tax reform to increase efficiency, prevent fraud and close its VAT gap by digitising its tax system. Although 1 October 2020 had been the intended date for mandatory participation, late changes announced by the tax authority mean only some taxpayers are obliged to use it for the rest of 2020. For others, participation during the first three months is voluntary. From 1 January 2021, it will be mandatory for all. 

Download our useful snapshot of the key details including what’s happening, who’s affected and the implementation timeline.

Why Sales Tax Partnerships Matter

Selecting the right tax partner is key to effectively managing the complexities of modern tax environments. See the key traits that make a successful partnership.

 

5 Things to Know About IRS Form 1099-NEC

Keeping pace with the number of regulatory updates and tax form changes has become a challenge for businesses. Just when you think you have everything figured out, along comes another new form. 2020 is no different.

This year the IRS is introducing Form 1099-NEC for nonemployee compensation. As this change will impact organizations of every type and size, we have assembled a list of the five things you absolutely need to know about Form 1099-NEC.

Additionally, Sovos is hosting another webinar on The Last Chance to Learn About Form 1099-NEC Before Tax Season. Register to save your spot, today!

Building a VAT Roadmap for 2021 and Beyond

At a time when the global VAT landscape is undergoing significant change, we teamed up with Shared Services Link to understand more about the key challenges faced by AP and VAT professionals at multinational companies and what their focus is for 2021 and beyond.

The Five Hidden IT Costs of a Sales & Use Tax Solution

Not All Clouds are Created Equal

Will You Be Ready For What Comes Next?

India E-invoicing Mandate

India has introduced an e-invoicing framework that requires taxpayers to transmit their invoice data to its government portal.

The new framework for invoice clearance in India is a hot topic that concerns many companies.